Nelson Says Senate to Extend, Reduce Homebuyer Credit

By Ryan J. Donmoyer and Dawn Kopecki

Oct. 26 (Bloomberg) -- Senate leaders are negotiating to extend and gradually reduce an $8,000 tax credit for first-time homebuyers through 2010, Senator Bill Nelson of Florida said.

“We should be able to extend that later this week,” Nelson, a Democrat, told reporters traveling today with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.

Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats, may seek to add the homebuyers extension to legislation extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Reid.

Lawmakers are under pressure from real estate agents, mortgage brokers and homebuilders to extend the $8,000 credit before it expires Nov. 30.

Baucus and Reid made a proposal last week to Senate Republicans that would extend the homebuyer credit through 2010, Lachapelle said. First-time homebuyers who close before April 1 would get the full $8,000, and the credit’s value would be reduced by $2,000 in each successive quarter until expiring at the end of the year.

“Relative to current law, this is better. But it’s worse than people are expecting,” said Tom Gallagher, head of policy research in the Washington offices of International Strategy and Investment Group, an independent research firm. “This is a four-month extension and a nine-month phase-out.”

Alternative Proposal

The proposal was intended to counter one by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Senator Johnny Isakson, a Georgia Republican and former real estate agent, to extend the full $8,000 credit through next June and to expand it to all couples earning $300,000 or less. The Baucus-Reid proposal would continue limiting the benefit to first-time homebuyers, Lachapelle said.

The terms for extending the homebuyer tax credit are still being negotiated, Lachapelle said.

House Speaker Nancy Pelosi, a California Democrat, is waiting to see the final Senate agreement before deciding whether to support it. “Generally, we do support extending it,” Pelosi spokesman Nedeam Elshami said. “But it’s premature to say anything until we see what action the Senate takes.”

Business Tax Break

Baucus and Reid also proposed an extension of a business tax break that allows companies with losses in 2008 and 2009 to amend tax returns for any of the previous four years to get a refund of taxes paid. Without the benefit, companies would have to wait years to apply those losses against future profits.

A version of the benefit was included in last February’s economic stimulus bill, though it was limited to companies with receipts under $15 million. A lobbying effort by business groups, including the Washington-based National Association of Manufacturers, to extend the benefit to all companies failed at the time; the Obama administration has since proposed a broader benefit in its budget.

The Reid-Baucus proposal was drafted to have a neutral effect on budget deficits by delaying until 2017 a tax benefit that would let multinational corporations claim more interest deductions. The break, enacted in 2004, is currently slated to take effect in 2011.

Fraudulent Claims

The first-time homebuyer credit, while popular with lawmakers, came under scrutiny last week when government officials said millions of dollars in benefits were erroneously or fraudulently claimed.

The Internal Revenue Service has identified 73,799 claims totaling almost $504 million that may not be from first-time homebuyers. They also found that 582 taxpayers under 18 years old and ineligible to buy a home claimed almost $4 million in credits. Children as young as 4 years old received the credit, Treasury Inspector General for Tax Administration J. Russell George told a House panel.

Linda Stiff, the IRS’s deputy commissioner for enforcement, told the House Ways and Means Subcommittee on Oversight that her staff has identified 160 potential criminal cases and 115 are now under investigation. In total, 8,000 claims have been flagged for potential criminal fraud, she said. “We are and will continue to vigorously pursue those who filed fraudulent claims for the credit,” Stiff said.

More than 1.2 million borrowers through Oct. 9 have claimed almost $8.5 billion of the $13.6 billion set aside for “first- time” homebuyer tax credits this year, George said. The program is aimed at easing the worst housing slump since the Great Depression.

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.netDawn Kopecki in Washington at dkopecki@bloomberg.com

Last Updated: October 26, 2009 14:38 EDT

U.S. Senator Dianne Feinstein responding to your message

Mon, October 26, 2009 9:39:34 AM
From:
"senator@feinstein.senate.gov"
To: jess.mangubat@dilbeck.com

Dear Mr. Mangubat:

Thank you for contacting me to express your support for expanding the first-time homebuyer tax credit. I appreciate the time you took to write and welcome the opportunity to respond.

In July 2008, the Housing and Economic Recovery Act of 2008 (Public Law 110-289) provided first-time homebuyers with a tax credit, equivalent to an interest-free loan, worth up to $7,500. The tax credit applied to homes purchased between April 9, 2009 and July 1, 2009. As the housing situation worsened in the fall of 2008, additional action was taken to prevent further declines in home values. Congress included in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), a more robust first-time homebuyer tax credit. Specifically, the tax credit was increased to $8,000 for homes purchased in 2009 and will not have to be repaid.

I understand your belief that the first-time homebuyer tax credit should be increased and expanded further. As you know, on June 10, 2009, Senator Johnny Isakson (R-GA) introduced the "Home Buyer Tax Credit Act of 2009" (S. 1230), which would increase the credit to up to $15,000, remove income eligibility limits, and expand it to include homebuyers purchasing homes other than their first. S. 1230 has been referred to the Senate Finance Committee, of which I am not a member. Please know that I will keep your support for this legislation in mind should it come before the full Senate.

Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841.

Best regards.

Sincerely yours,
Dianne Feinstein
United States Senator

Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup.

C.A.R. releases California Housing Market Forecast for 2010

LOS ANGELES (Oct. 7) –“California’s housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market,” said C.A.R. President James Liptak. “This follows two years of double-digit sales declines in 2006 and 2007. Looking ahead, we expect sales to moderate to a more sustainable pace.”

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) "2010 California Housing Market Forecast" will be presented this afternoon during CALIFORNIA REALTOR® EXPO 2009 (www.realtorexpo.org), running from Oct. 6-8 at the San Jose Convention Center in San Jose, Calif. The trade show is expected to attract more than 7,000 attendees and is the largest state real estate trade show in the nation.

“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” Liptak added. “2010 will mark the beginning of the ‘new normal’ for California’s housing market. This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to the forecast. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

“Housing in California has become a tale of two markets,” Liptak said. “The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of home buyers to secure financing as well as their concerns about where prices are headed. While demand from first-time buyers for low-end properties will continue throughout next year, sales could be impacted if discretionary sellers do not return to the market by the second half of 2010.

“2009 marked a unique opportunity for first-time home buyers,” Liptak said. “Homes were more affordable than they have been in years, interest rates hovered near historic lows, and the federal tax credit helped more than 1 million people become homeowners nationwide. Now is the time for Congress to extend the federal tax credit and to expand it to all buyers, not just first-timers.”

“With distressed properties accounting for nearly one-third of the sales in 2010, inventory will be relatively lean, under six months during the off-season months, and a roughly four-month supply during the peak season,” said C.A.R. and Vice President Leslie Appleton-Young. “We expect the median price to decrease slightly through the remainder of 2009 and into next year, then rise before leveling off next summer. For the year as a whole, home prices are forecast to reach $280,000.”

“Although it appears at this time that lenders are closely monitoring the flow of distressed properties onto the market, there could be an exertion of downward pressure on home prices should a heavier than expected wave of foreclosures come to market next year,” she said.

“The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government,” Appleton-Young said.

Don’t miss “The ‘New Normal’: What Recovery Means in 2010” at the San Jose Convention Center in San Jose, Calif. on Thursday, Oct. 8, from 2:30 p.m. to 4p.m. Panelists include Richard Green, director of the Lusk Center for Real Estate at the University of Southern California; Glenn E. Crellin, director of the Washington Center for Real Estate Research at Washington State University; and Jack Kyser, chief economist for the Los Angeles Economic Development Corporation. C.A.R. Vice President and Chief Economist Leslie Appleton-Young will serve as moderator.

for the 2010 Table forecast please click on link

http://www.car.org/newsstand/newsreleases/2010forecast/

The Current Real Estate Market in 3mins.....

http://www.youtube.com/watch?v=SM7oWKgCVo4

This sums up what Realtors who represent buyers throughout the market are going through. It's funny, sad and the truth.

People understand it a little more after watching this

Mortgage Applications Rise as Rates Fall

Daily Real Estate News | October 7, 2009 | Share

Mortgage applications increased last week as mortgage rates declined for the third straight week.

The Mortgage Bankers Association weekly index rose 16.4 percent on a seasonally adjusted basis compared to the previous week. And was up 38.4 percent compared to the same week last year.

The unadjusted purchase index increased 12.9 percent compared to the previous week and was 2.2 percent lower than it was a year ago.

The refinance index increased 18.2 percent and was at its highest level since mid-May.

Thirty- and 15-year mortgage rates were well below 5 percent:

30-year fixed-rate mortgages decreased to 4.89 percent from 4.94 percent.
15-year fixed-rate mortgages decreased to 4.32 percent from 4.34 percent.
1-year ARMs increased to 6.56 percent from 6.40 percent.

Source: Mortgage Bankers Association (10/07/2009)

A Historic Time to Buy

Daily Real Estate News | October 6, 2009 |

Young people just starting to invest and buying their first homes are potentially the winners in this recession.

First-time homebuyers, most between the ages of 25 and 45, accounted for about 45 percent of home sales from January through July 2009, according to the National Association of REALTORS®

"This is a historic time," says George Jaramillo, a 35-year-old business analyst in Atlanta, who recently bought three homes, two of them foreclosures. "It's a great opportunity to make some great gains in the future."

A study by investment company T. Rowe Price points out that investing when prices are low can result in amazing gains. For instance, between 1970 and 1990, the annualized rate of return for the S&P 500 was 11.5 percent.

"We need to be shouting from the rooftops that this is not the time to get out of the market if you're young," says Christine Fahlund, a senior financial planner with T. Rowe Price. "This is the time to be in the market."

Source: The Associated Press, Chip Cutter (10/05/2009)

Be a Neighborhood Crime Fighter

You don’t have to wear a badge to join the Pasadena Police Department in fighting crime!

Protect Your Home.
During warmer weather, many residents leave their windows and doors open to catch a breeze. That’s an open invitation to thieves! Always lock up when you’re not home; when you are home, consider using wooden dowels or window stops to leave a narrow opening big enough for ventilation but too small for a person.
Always use your peephole or a window before responding to a knock at the door. Leave the porch light on at night. Never open the door to a stranger. If you’re uncomfortable with the person outside, call the police and give a description.

Get Involved in Neighborhood Watch.
By starting your own group and working with local police, you can get to know your neighbors, learn how to recognize suspicious activities and become more assertive about reporting crimes. To find or start a Neighborhood Watch group in your area, call 744-4551.

Get your children involved!
The Pasadena Police Department is enrolling elementary school students ages 6 to 12 (and their parents) for the third annual Kids’ Safety Academy every Saturday from Oct. 3 to Nov. 14 from 9 a.m. to noon. Classes will cover stranger danger, fire safety, disaster preparedness, environmental stewardship, water skills, bike safety and much more. Reserve a seat by calling 744-7659 or e-mailing aramos@cityofpasadena.net.

The Pasadena Police Explorer Program invites teens and young adults ages 14 to 20 to explore careers in law enforcement. After an 18-week Saturday academy, recruits meet every second and fourth Wednesday at 6 p.m. plus participate in local competitions, march at ceremonies, volunteer at city events and enjoy field trips to local attractions. E-mail gthompson@cityofpasadena.net or call 744-7653 for details.

from the Pasadena In Focus,Pasadena In Focus - September - October 2009

Seeking Real Estate Bargains? Try Looking at the High End

Falling real estate prices are becoming as much a feature of high-end neighborhoods as ocean views, infinity pools and four-car garages.
While the latest data suggests prices for mainstream homes may be stabilizing after several years of pain, the news for luxury homes isn't looking as good.
That's bad news for sellers, naturally, but anyone in the market for a home listed for $2 million or more will find deeply discounted asking prices—and may be able to command even lower prices.
On Tuesday, data from the Federal Housing Finance Agency showed that average home prices ticked up 0.3% nationwide between June and July, including a 1.6% bounce on the west coast. The gains are modest, and they are partly influenced by the season—higher-end homes tend to sell better in late spring and early summer, as families try to move before the school year. Analysts are disappointed the rise was not higher.
Nonetheless, prices have now risen three months in a row. And compared with the disastrous events of the past few years, anything other than Armageddon is apt to raise spirits.
But these numbers only relate to homes purchased with conforming loans backed by the FHFA—in most areas, that describes mortgages of up to $417,000, or up to $713,000 in the country's most expensive regions.
View Full ImageBloomberg News
A stone patio surrounds the pool outside a spec home at 38 French Road in Greenwich, Conn. The city is seeing the worst home-sales market—and deepest discounts—in decades.

That overlooks luxury and high-end homes, where the outlook remains bleak.
"I would say we're 40% off 2007 prices for everything," says broker Chad Rogers, who covers the area from Malibu to Hollywood Hills for Hilton & Hyland, a Beverly Hills real-estate firm. "We're now seeing prices consistent with where we were back in 2003."
"The $10 million to $30 million properties are on the market for a very long time," says Cathy Wood, a real estate broker covering Beverly Hills and surrounding areas for realty firm Gibson International. "They're seeing a lot of price reductions."
Realtors, she says, "are now selling $500,000 condos, when they used to sell $5 million homes."
Across the country in hedge-fund haven Greenwich, Conn., local broker Eric Bjork at Prudential Real Estate finds a similar effect. "There's a new level of value being set," he says. "The $8 million [homes] are selling for $6 million, and the $10 millions are selling for $8 million. When you do the math, it looks like an adjustment of 20% to 30%."
You'll find similar anecdotal data in several high-end markets. But real estate Web site Trulia.com, which tracks listing prices on multiple listing services across the country, took a look at what's happening to listing prices for homes over the $2 million mark.
Such homes only account for about 2% of the properties listed on the site, but represent 25% of the total price reductions by value. Overall, sellers listing homes for more than $2 million have dropped their asking prices by a total of $7 billion, with an average price reduction of 14%. The average for all properties tracked by Trulia is only 10%.
Data for individual Zip codes is intriguing, whether you're in the market or you just like to rubberneck. According to Trulia data, 28% of the homes currently for sale in Beverly Hills (Zip code 90210) have dropped their price, with an average discount of 11%. In Aspen, Colo., (81611), 39% of the homes have cut their price, by an average of 16%.
On New York's Upper East Side (10065), no less than 40% of the homes have slashed prices—and by an average of 18%. In California, some of the most exclusive areas in Newport Beach, Big Sur and Monterey have seen a third of the sellers reduct prices, by an average of about 15%. Malibu? More than half have cut prices.
Chip Case, economics professor at Wellesley College and one half of the Case-Shiller index duo, says that some of these markets may be finally catching up to the wider housing market crash. "That level was more in the hold-out category," Mr. Case says. "Up until recently the foreclosures weren't hitting that level .But they are now. There's no question about that. You're seeing some contagion from the prime level to the luxury end."
Bottom line: At the high end, it's a good time to be shopping for that dream home.
During—and after—a bubble, investors often hope that "quality assets" will hold value. It's usually a vain hope. Just ask people who owned luxury condos in Tokyo after 1990, or investors in Cisco Systems (CSCO) after the tech-stock bubble popped. Real estate is not that different.
Sooner or later, even rich homeowners need to sell. They get divorced. Their company collapses. They relocate or retire. And, when they get tired of waiting, they cut their price. Factoring in taxes, upkeep and the opportunity cost of keeping money in a non-performing asset, an empty luxury home may be costing owners a lot just by sitting there. That gives them a powerful incentive to make a deal.